UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] Quarterly report under Section 13 or 15 (d) of the Securities Exchange Act
of 1934
For the quarterly period ended September 30, 1998
OR
[ ] Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from __________ to __________
Commission File Number 1-10659
ROBERTSON-CECO CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-3479146
(State or other jurisdiction I.R.S. Employer
of incorporation or organization) Identification No.
5000 Executive Parkway, Ste. 425, San Ramon, California 94583
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 925-543-7599
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at November 6, 1998
Common Stock, par value $0.01 per share 16,111,550
<PAGE>
ROBERTSON-CECO CORPORATION
Form 10-Q
For Quarter Ended September 30, 1998
INDEX
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets --
September 30, 1998 and December 31, 1997....................3
Condensed Consolidated Statements of Operations --
Three and Nine Months Ended September 30, 1998 and 1997.....5
Condensed Consolidated Statements of Cash Flows --
Nine Months Ended September 30, 1998 and 1997...............7
Notes to Condensed Consolidated Financial
Statements................................................8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................12
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings................................................16
Item 5. Other Information................................................16
Item 6. Exhibits and Reports on Form 8-K.................................16
Signatures..................................................................17
Exhibit Index...............................................................18
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
ROBERTSON-CECO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
(In thousands)
(Unaudited)
September 30 December 31
1998 1997
------------ -----------
-- ASSETS--
CURRENT ASSETS:
Cash and cash equivalents.................... $ 23,465 $ 19,461
Accounts and notes receivable, net........... 29,370 28,249
Inventories:
Work in process.......................... 6,636 5,327
Material and supplies.................... 8,843 8,375
--------- ----------
Total inventories........................ 15,479 13,702
Deferred taxes, current...................... 7,109 15,688
Other current assets......................... 1,035 557
--------- ----------
Total current assets..................... 76,458 77,657
PROPERTY - at cost............................... 51,728 49,408
Less accumulated depreciation................ (25,322) (22,902)
--------- ----------
Property, net............................ 26,406 26,506
DEFERRED TAXES................................... 12,159 12,329
EXCESS OF COST OVER NET ASSETS OF
ACQUIRED BUSINESSES - NET.................... 25,162 25,783
OTHER NON-CURRENT ASSETS......................... 1,066 1,269
--------- ----------
TOTAL ASSETS................................. $ 141,251 $ 143,544
========= ==========
See Notes to Condensed Consolidated Financial Statements
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
ROBERTSON-CECO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
(In thousands, except per share data)
(Unaudited)
September 30 December 31
1998 1997
--LIABILITIES --
CURRENT LIABILITIES:
Current portion of long-term debt............ $ - $ 5,000
Accounts payable, principally trade.......... 12,618 13,209
Accrued payroll and benefits................. 7,314 7,525
Other accrued liabilities.................... 13,364 16,796
--------- ---------
Total current liabilities.................... 33,296 42,530
LONG-TERM DEBT, less current portion............. - 10,000
DEFERRED INCOME TAXES............................ 5,874 5,891
OTHER LONG-TERM LIABILITIES...................... 36,471 35,377
--------- ---------
TOTAL LIABILITIES................................ 75,641 93,798
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, par value $0.01 per share...... 161 161
Capital surplus.............................. 178,256 178,256
Retained earnings (deficit).................. (111,861) (128,173)
Deferred compensation........................ (136) (160)
Accumulated other comprehensive income....... (810) (338)
--------- ---------
Stockholders' equity..................... 65,610 49,746
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY.............. $ 141,25 $143,544
========== ==========
See Notes to Condensed Consolidated Financial Statements
<PAGE>
<TABLE>
ROBERTSON-CECO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
(In thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
---------------------- ---------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET REVENUES........................... $ 78,281 $ 79,170 $ 214,987 $ 208,884
COSTS OF SALES ......................... 61,808 64,496 170,857 169,810
--------- --------- --------- ---------
GROSS PROFIT ........................... 16,473 14,674 44,130 39,074
SELLING, GENERAL AND
ADMINISTRATIVE ..................... 6,263 5,748 18,026 17,395
--------- --------- --------- ---------
OPERATING INCOME ....................... 10,210 8,926 26,104 21,679
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Interest expense ................... (370) (388) (1,017) (1,294)
Other income - net ................. 473 144 1,231 483
--------- --------- --------- ---------
103 (244) 214 (811)
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES ............. 10,313 8,682 26,318 20,868
INCOME TAXES ........................... 4,028 3,103 10,006 7,794
--------- --------- --------- ---------
INCOME BEFORE EXTRAORDINARY
ITEM ............................... 6,285 5,579 16,312 13,074
EXTRAORDINARY GAIN ON DEBT
REDEMPTION ......................... -- -- -- 4,568
--------- --------- --------- ---------
NET INCOME ............................. $ 6,285 $ 5,579 $ 16,312 $ 17,642
========= ========= ========= =========
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
ROBERTSON-CECO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONT'D)
- --------------------------------------------------------------------------------
(In thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------------- ---------------
1998 1997 1998 1997
----------- --------- --------- -------
<S> <C> <C> <C> <C>
RETAINED EARNINGS (DEFICIT)
AT BEGINNING OF PERIOD ........... $ (118,146) $ (139,464) $ (128,173) $ (151,527)
NET INCOME ........................... 6,285 5,579 16,312 17,642
------------ ----------- ----------- -----------
RETAINED EARNINGS (DEFICIT)
AT END OF PERIOD .......... $ (111,861) $ (133,885) $ (111,861) $ (133,885)
============ =========== =========== ===========
BASIC/DILUTED INCOME PER
COMMON SHARE:
Income before Extraordinary Item . $ .39 $ .35 $ 1.02 $.82
Extraordinary Item ............... $ -- $ -- $ -- .28
------------ ----------- ----------- -----------
NET INCOME ........................... $ .39 $ .35 $ 1.02 $ 1.10
============ =========== =========== ===========
SHARES USED IN INCOME
PER SHARE CALCULATION 16,060 16,056 16,060 16,056
=========== =========== =========== ===========
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
ROBERTSON-CECO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
(In thousands)
(Unaudited)
Nine Months Ended
September 30
-----------------
1998 1997
------ ------
CASH FLOWS FROM OPERATING ACTIVITIES:
Income before extraordinary item ....................... $ 16,312 $ 13,074
Adjustments to reconcile income before extraordinary
item to net cash provided by (used for)
operating activities:
Depreciation and amortization ...................... 3,921 3,355
Deferred income taxes .............................. 10,006 7,794
Changes in assets and liabilities:
Increase in accounts and notes receivable ...... (1,121) (10,018)
(Increase) decrease in inventories ............. (1,777) 337
Increase (decrease) in accounts payable ........ (591) 5,286
Net changes in other assets and liabilities .... (2,718) 164
-------- --------
NET CASH PROVIDED BY OPERATING
ACTIVITIES ..................................... 24,032 19,992
-------- --------
NET CASH USED FOR DISCONTINUED
OPERATIONS ..................................... (2,112) (1,804)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ................................... (2,916) (5,357)
-------- --------
NET CASH USED FOR INVESTING ACTIVITIES ............. (2,916) (5,357)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term borrowings ....................... (15,000) (11,481)
Payments of capitalized interest on 12% notes .......... -- (338)
-------- --------
NET CASH USED FOR FINANCING ACTIVITIES ............. (15,000) (11,819)
-------- --------
NET INCREASE IN CASH AND CASH
EQUIVALENTS .................................... 4,004 1,012
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD ............................ 19,461 12,225
-------- --------
CASH AND CASH EQUIVALENTS -
END OF PERIOD .................................. $ 23,465 $ 13,237
======== ========
SUPPLEMENTAL CASH FLOW DATA:
Cash payments made for:
Interest ....................................... $ 845 $ 1,587
======== ========
Income taxes ................................... $ -- $ --
========
See Notes to Condensed Consolidated Financial Statements
<PAGE>
ROBERTSON-CECO CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
In the opinion of Robertson-Ceco Corporation (the "Company"), the
accompanying unaudited Condensed Consolidated Financial Statements
contain all adjustments necessary to present fairly the financial
position as of September 30, 1998 and the results of operations and cash
flows for the periods presented. All adjustments recorded during the
period consisted of normal recurring adjustments. Certain previously
reported amounts have been reclassified to conform to the 1998
presentation.
Statement of Financial Accounting Standards No. 130, Reporting
Comprehensive Income ("SFAS No. 130") was issued in June 1997 with
adoption required for fiscal years beginning after December 31, 1997.
SFAS No. 130 requires the presentation of an additional income measure
(termed "comprehensive income"), which adjusts traditional net income
for certain items that previously were only reflected as direct charges
to equity (such as minimum pension liabilities and foreign currency
translation adjustments). The dollar amount of the Company's adjustments
required by SFAS No. 130 is not significant so there is not a
significant difference between "traditional" net income and
comprehensive income for the three and nine months ended September 30,
1998 and 1997.
2. TAXES ON INCOME
Under Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes," the Company is required to recognize the portion of
its deferred tax asset which it believes will more likely than not be
realized. Management believes that the Company will be able to realize
the unreserved portion of its deferred tax asset through future
earnings. Management will continue to evaluate the level of its deferred
tax valuation allowance at each balance sheet date and adjust the
valuation reserve as warranted by changes in the Company's expected
future profitability, amounts and timing of payments related to its
retained liabilities, or other events which might affect the realization
of the Company's deferred tax asset.
<PAGE>
3. OTHER LIABILITIES
Other accrued liabilities consisted of the following:
<TABLE>
<CAPTION>
September 30 December 31
1998 1997
------------ -----------
(Thousands)
<S> <C> <C>
Insurance liabilities ............................ $ 1,528 $ 3,560
Warranty and backcharge
reserves ................................... 2,956 3,738
Deferred revenues ............................... 961 524
Accrued interest ............................... 60 60
Other ........................................... 7,859 8,914
--------- ----------
$ 13,364 $ 16,796
========= ==========
Other long-term liabilities consisted of the following:
Reserves Related to Sold or Discontinued Business -
Insurance liabilities .......................... $ 5,752 $ 3,453
Environmental .................................. 4,329 4,792
Federal Agreement settlement ................... 2,250 3,000
Dispositions ................................... 5,937 5,315
Other .......................................... 11,725 11,904
--------- ----------
$ 29,993 $ 28,464
--------- ----------
Warranty and backcharges ......................... 1,765 1,745
All Other ........................................ 4,713 5,168
--------- ----------
$ 36,471 $ 35,377
========= ==========
</TABLE>
4. DEBT
On December 31, 1996, the Company entered into a new credit agreement
("Credit Agreement") with a group of banks. Under the terms of the
Credit Agreement, the lenders agreed to provide a term loan of up to
$20,000,000, due June 30, 2001 which was paid in full in September,
1998. At this date, the Company also reduced the amount available under
the revolving credit and letter of credit facility from $25,000,000 to
$15,000,000 maturing December 31, 2001. Up to $12,000,000 of the
revolving credit facility can be used to support outstanding letters of
credit. Interest on the loans under the Credit Agreement is based on the
prime or the Eurodollar rate plus a factor which depends on the
Company's ratio of debt to earnings before taxes, interest, depreciation
and amortization. In addition, the Company pays a commitment fee on the
unused amounts of the credit facility. Availability under the revolving
credit facility is based on eligible accounts receivable and inventory.
As of September 30, 1998, the borrowing base was
<PAGE>
approximately $31.1 million. As collateral under the Credit Agreement,
the Company has granted the lenders a security interest in all of the
assets of the Company and its Restricted Subsidiaries. The Credit
Agreement contains certain financial covenants restricting dividend
payments, repurchase of stock and the issuance of additional debt,
amongst other matters. Under the terms of the Company's debt agreement,
$28.0 million was available for dividends or repurchase of stock at
September 30, 1998. The Company is in compliance with the provisions of
the Credit Agreement.
On January 15, 1997, the amounts outstanding on the 12% Senior
Subordinated Notes ("12% Notes") and the 15.5% Subordinated Debentures
("15.5% Debentures") were redeemed utilizing proceeds from borrowing
under the new term loan in the Credit Agreement plus available cash.
Accordingly, in connection with the redemption of the 12% Notes and
15.5% Debentures in January, the Company recorded a gain of $4.6
million, net of taxes of $2.9 million, in the first quarter of 1997.
As of September 30, 1998, the Company had outstanding letters of credit
of approximately $9.5 million used principally to support insurance and
bonding programs.
5. COMMITMENTS AND CONTINGENCIES
On March 3, 1995, the Company and its surety, Federal Insurance Company
("Federal"), entered into an agreement (the "Federal Agreement") under
which Federal agreed to hold the Company harmless from certain claims
pending in connection with one of the Company's former Fixed Price
Custom Curtainwall projects. Under the terms of the Federal Agreement,
Federal assumed control of the litigation and will also be the
beneficiary of any affirmative claim which the Company may receive. As
consideration for Federal's obligations, the Company assigned to Federal
the $3,000,000 interest bearing promissory note received from the
Company's sale of the Construction Group (the "Concrete Note"), and
agreed to pay Federal $1,000,000 per year, in equal quarterly
installments, for seven years without interest commencing March 24,
1995. As security for the payment obligations to Federal, the Company
granted to Federal a security interest in all of the Company's assets
and the purchaser delivered a financial guarantee insurance policy
securing payment of the Concrete Note. The Federal Agreement provides
that (i) at least 30% of the ownership of the common stock of the
Company must be held jointly by the current Chairman of the Company, who
currently controls approximately 1.6% of the outstanding common stock,
and the current Chief Executive Officer of the Company, who currently
controls approximately 65.4% of the outstanding common stock, and (ii)
either or both must continue as Chief Executive Officer and/or Chairman
of the Company. In the event such common stock ownership and executive
officers are not maintained, the Company will be required to make
immediate payment of the remaining unpaid settlement amount which was
$3,250,000 at September 30, 1998.
There are various other proceedings pending against or involving the
Company which are ordinary or routine given the nature of the Company's
business. The Company has recorded a liability related to litigation
where it is both probable that a loss will be incurred and the amount of
the loss can be reasonably estimated.
<PAGE>
The Company continues to be liable for liabilities associated with sold
or discontinued businesses prior to the sale or disposition including,
in certain instances, liabilities arising from Company self-insurance
programs, unfunded pension liabilities, warranty and rectification
claims, severance obligations, environmental clean-up matters, and
unresolved litigation arising in the normal course of the former
business activities. Management has made estimates as to the amount and
timing of the payment of such liabilities which are reflected in the
accompanying consolidated financial statements. Given the subjective
nature of many of these liabilities, their ultimate outcome cannot be
predicted with certainty. However, based upon currently available
information, management does not expect that the ultimate outcome of
such matters will have a material effect on the consolidated financial
statements.
The Company has been identified as a potentially responsible party by
various state and Federal authorities for clean-up and monitoring costs
at waste disposal sites related to discontinued operations. Due to
various factors, it is difficult to estimate future environmental
related expenditures. The Company has engaged third parties to perform
feasibility studies and assist in estimating the cost of investigation
and remediation. At September 30, 1998, the Company has recorded
reserves of approximately $6 million, representing management's and the
third parties' best estimate of future costs to be incurred. The
majority of these expenditures are expected to be incurred in the next
five years. Although unexpected events could have an impact on these
estimates, management does not believe that additional costs that could
be incurred would have a material effect on the consolidated financial
statements.
With respect to the environmental clean-up matters, the Company has
claimed coverage under its insurance policies for past and future
clean-up costs related to certain sites for which the Company believes
it is indemnified under its insurance policies. The insurer has refused
to admit or deny coverage under the Company's policies. As a result, the
Company has filed a complaint against the insurer seeking to recover
past and future clean-up costs. It is not currently possible to predict
the amount or timing of proceeds, if any, from the ultimate resolution
of this matter.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results Of Operations
Revenues for the third quarter of 1998 were $78.3 million, a decrease of $.9
million, or 1.1%, when compared to the third quarter of 1997. For the nine
months ended September 30, 1998, revenues were $215.0 million compared to $208.9
million in 1997, an increase of $6.1 million, or 2.9%. Poor weather conditions
earlier in the year are still having a negative impact on some locations causing
some shipments to be delayed. Nevertheless, year-to-date sales were still
favorable compared to 1997 as a result of good industry conditions combined with
stronger pricing. Favorable revenue mix and lower discounts to customers
experienced in 1998 have positively impacted margins. The Company's gross profit
increased $1.8 million and $5.1 million for the three and nine months ended
September 30, 1998, respectively, from the same periods in 1997. The gross
margin increased from 18.5% in the third quarter of 1997 to 21.0% in 1998. For
the nine months, the gross margin increased from 18.7% in 1997 to 20.5% in 1998.
Selling, general and administrative expenses ("S,G & A") increased $.5 million
in the third quarter of 1998 compared to the third quarter of 1997 and
year-to-date S,G & A has increased $.6 million from the same nine month period
in 1997. Increased bad debt expense and the addition of temporary resources to
complete several high priority systems projects have contributed to the
quarter-to-date and year-to-date increases.
The combination of increased margins partially offset by increased selling,
general and administrative expenses, resulted in operating income of $10.2
million for the three months ended September 30, 1998, compared to $8.9 million
in 1997, a 14.4% increase. For the nine months ended September 30, 1998,
operating income was $26.1 million compared to $21.7 million for the same period
ended 1997, a 20.4% increase.
Interest expense remained constant for the three months ended September 30, 1998
and 1997 at $.4 million. For the nine months ended September 30, 1998, interest
expense declined $.3 million from the same period in 1997 to $1.0 million. The
Company had both lower average borrowings and lower interest rates during the
1998 period. For the quarter ended September 30, 1998, these favorable impacts
were offset by additional debt amortization expense associated with paying off
the term-loan in September, 1998. Other income-net consists almost entirely of
interest income and increased $.3 million and $.7 million for the three and nine
months ended September 30, 1998, respectively, from the same periods in 1997.
This increase is the direct result of higher average cash balances between
years.
Income before extraordinary item was $6.3 million, $.39 per share, during the
three months ended September 30, 1998 compared to $5.6 million, $.35 per share,
in the same period in 1997. For the nine months ended September 30, 1998 and
1997, income before extraordinary item was $16.3 million and $13.1 million, or
$1.02 per share and $.82 per share, respectively. Increased customer demand,
better pricing, lower interest costs and higher interest income all contributed
to the 1998 favorable results compared to last year.
<PAGE>
Net income was $6.3 million, $.39 per share, for the three months ended
September 30, 1998 as compared to $5.6 million, $.35 per share, in the 1997
period. For the nine months ended September 30, 1998, net income was $16.3
million, $1.02 per share, as compared to $17.6 million, $1.10 per share, for the
same period ended 1997. The 1997 amount includes a $4.6 million, $.28 per share,
extraordinary gain, net of income taxes, representing the reduction in accrued
interest on the Company's 12% Notes when these notes were redeemed in January
1997.
Backlog of Orders
At September 30, 1998 the backlog of unfilled orders believed to be firm was
approximately $90.8 million compared to a backlog of $92.1 million at September
30, 1997 and $72.7 million at December 31, 1997.
Litigation
There are various proceedings pending against or involving the Company which are
ordinary or routine given the nature of the Company's business. The Company has
recorded a liability related to litigation where it is both probable that a loss
has been incurred and the amount of the loss can be reasonably estimated. While
the outcome of the Company's legal proceedings cannot at this time be predicted
with certainty, management does not expect that these matters will have a
material adverse effect on the consolidated financial condition or results of
operations of the Company.
Environmental Matters
The Company's current and prior manufacturing activities have generated and
continue to generate materials classified as hazardous wastes. The Company
devotes considerable resources to compliance with legal and regulatory
requirements relating to (a) the use of these materials, (b) the proper disposal
of such materials and (c) the protection of the environment. These requirements
include clean-ups at various sites. The Company's policy is to accrue
environmental and clean-up related costs of a non-capital nature when it is
probable that a liability has been incurred and such liability can be reasonably
estimated. However, no assurance can be given that discovery of new facts and
the application of the legal and regulatory requirements to those facts would
not change the Company's estimate of costs it could be required to pay in any
particular situation. Based upon currently available information, including the
reports of third parties, management does not believe resolution of these
matters will have a material adverse effect on the consolidated financial
condition or results of operations of the Company.
Liquidity and Capital Resources
During the nine months ended September 30, 1998, the Company generated $24.0
million of cash from its operating activities compared to $20.0 million during
the same period in 1997. Operating cash flow in 1998 benefited from pre-tax
income of $26.3 million which was partially offset by uses of cash primarily
associated with working capital requirements to support increased sales and the
Company's efforts to take advantage of early payment discounts.
<PAGE>
During the nine months ended September 30, 1998, the Company spent approximately
$2.1 million related to discontinued operations. In June, 1998, the Company
settled a large general liability claim associated with one of the Company's
discontinued operations.
The Company spent $2.9 million on capital expenditures during the first nine
months of 1998 directed toward upgrading and improving manufacturing equipment.
The Company paid down $2.5 million of debt during the six months ended June 30,
1998 per the terms of the Credit Agreement. In September 1998, the remaining
term loan balance of $15.0 million was paid and availability under the revolving
credit was reduced to $15 million. See Note 4.
The Company's credit facility has current maximum availability of $15.0 million
and expires on December 31, 2001. Availability under the $15 million revolving
credit portion of the Credit Facility is based on a percentage of eligible
accounts receivable and inventory. At September 30, 1998, the Borrowing Base was
estimated to be $31.1 million. As collateral under the Credit Facility, the
Company has granted the lenders a security interest in all of the assets of the
Company and its Restricted Subsidiaries, as defined. The Company had unused
availability under the Credit Facility of $5.5 million at September 30, 1998.
The Company reduced its letters of credit balance from approximately $10.2
million as of June 30, 1998 to $9.5 million as of September 30, 1998.
Year 2000
The "Year 2000" issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Specifically,
computational errors are a known risk with respect to dates after December 31,
1999. The company has assessed its computer equipment and business computer
systems, and is in the process of assessing its manufacturing equipment and
facilities with embedded systems to prepare for the Year 2000.
Management believes the modifications of its business computer systems will be
completed in adequate time to enable proper processing of transactions relating
to the Year 2000 and beyond. The anticipated date of completion of these
modifications is May 1999. Expenditures for this process approximate $1.9
million to date, and the Company has budgeted an additional $.5 million for
completion. Until the assessment of manufacturing equipment and facilities has
been completed, it is impossible to determine, with any degree of certainty, the
timetable for completion of potential modifications or related costs. However,
preliminary observations of equipment and facilities which could create an
element of Year 2000 risk indicate that costs of possible modifications would
not be material and would be completed in adequate time to minimize any
significant Year 2000 risks.
While the Company believes that its efforts will adequately address its internal
Year 2000 concerns, there are key risk factors associated with the Year 2000
that the Company cannot directly control, primarily the readiness of its
customers, key suppliers, public infrastructure suppliers and other vendors. The
Company is in the process of communicating with key third
<PAGE>
parties to assess their Year 2000 readiness. Because the market for the
Company's products is comprised of numerous customers with a variety of sizes
and levels of sophistication, the noncompliance with Year 2000 of any one would
not have a detrimental impact on the Company's financial position or results of
operations. Based upon the Company's findings relating to the compliance status
of its significant suppliers, the Company will establish contingency plans which
will involve identification of alternative sources of supply, developing
business resumption plans, and evaluating alternative manual processes. Actions
may be as simple as locating an alternative material vendor who is Year 2000
compliant, or as complex as curtailing operations in one or more locations due
to lack of electrical power.
The Company cannot predict the likelihood of a significant disruption of its
customer's or suppliers' businesses or of the economy as a whole, either of
which could have a material adverse impact on the Company.
"Safe Harbor" Provisions
The Company may from time to time make written or oral forward-looking
statements, including statements contained in the Company's filings with the
Securities and Exchange Commission and its reports to stockholders. This
Quarterly Report contains forward-looking statements made in good faith by the
corporation pursuant to these "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. In connection with these "safe harbor"
provisions, the Company identifies important factors that could cause actual
results to differ materially from those contained in any forward-looking
statements made by or on behalf of the Company. Any such statement is qualified
by reference to the following cautionary statements.
The Company's business operates in a highly competitive market and is subject to
changes in general economic conditions, intense competition, changes in consumer
preferences, foreign exchange rate fluctuations, the degree of acceptance of new
product introductions, the uncertainties of litigation, as well as other risks
and uncertainties detailed from time to time in the Company's Securities and
Exchange Commission filings.
Developments in any of these areas, which are more fully described in the
Company's filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K for the year ended December 31, 1997, could cause the
Company's results to differ materially from results that have been or may be
projected by or on behalf of the Company.
The Company cautions that the foregoing list of important factors is not
inclusive. The Company does not undertake to update any forward-looking
statement that may be made from time to time by or on behalf of the Company.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
Information describing certain of the Company's legal proceedings
and environmental matters is included in Part 1, Item 1, in Note 6
to the "Notes to Condensed Consolidated Financial Statements," and
in Part 1, Item 2, in Management's Discussion and Analysis of
Financial Condition and Results of Operations under the captions
"Litigation" and "Environmental Matters," and is
hereby incorporated by reference.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 3.1 - Registrant's Second Restated Certificate of
Incorporation, effective July 23, 1993, filed as
Exhibit 3 to Registrant's report on Form 8-K dated
July 14, 1993 (File No. 1-10659), and incorporated
herein by reference thereto
Exhibit 3.2 - Bylaws of Registrant, effective November 8,
1990, and as Amended on November 12, 1991, August
27, 1992 and December 16, 1993, filed as Exhibit
3.2 to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1993 (File No.
1-10659), and incorporated herein by reference
thereto
Exhibit 11 - Computation of Earnings per Common Share,
filed herewith
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
None
.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ROBERTSON-CECO CORPORATION
------------------------------------
(Registrant)
By: /s/ Patrick G. McNulty
-----------------------------
Patrick G. McNulty
Corporate Controller
November 13, 1998
<PAGE>
ROBERTSON-CECO CORPORATION
EXHIBIT INDEX
EXHIBIT 11 - Computation of Earnings Per Common Share
EXHIBIT 27 - Financial Data Schedule
EXHIBIT 11
<TABLE>
ROBERTSON-CECO CORPORATION
COMPUTATION OF BASIC EARNINGS PER COMMON SHARE
----------------------------------------------
(In thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------ -----------------
1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
BASIC:
Income:
Income from continuing operations......... $ 6,285 $ 5,579 $ 16,312 $ 13,074
Extraordinary gain .......................... - - - 4,568
-------- -------- --------- -------
Total income for basic earnings per
share calculation ....................... $ 6,285 $ 5,579 $ 16,312 $ 17,642
========= ======== ======== ========
Shares:
Average number of common
shares outstanding......................... 16,060 16,056 16,060 16,056
Earnings Per Share:
Income from continuing operations........... $ .39 $ .35 $ 1.02 $ .82
Extraordinary gain .......................... - - - .28
---------- -------- -------- -------
Net income per share....................... $ .39 $ .35 $ 1.02 $ 1.10
=========== ======== ======== =======
</TABLE>
<PAGE>
EXHIBIT 11
<TABLE>
ROBERTSON-CECO CORPORATION
COMPUTATION OF DILUTED EARNINGS PER COMMON SHARE
------------------------------------------------
(In thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------ -----------------
1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
DILUTED:
Income:
Income from continuing operations......... $ 6,285 $ 5,579 $ 16,312 $ 13,074
Extraordinary gain .......................... - - - 4,568
-------- -------- -------- --------
Net income for diluted earnings per
share calculation ....................... $ 6,285 $ 5,579 $ 16,312 $ 17,642
======== ======== ======== ========
Shares:
Average number of common
shares outstanding....................... 16,060 16,056 16,060 16,056
Incremental shares to reflect dilutive
effect of deferred compensation plan..... 37 36 37 33
-------- -------- -------- --------
Total number of common shares
assuming dilution ....................... 16,097 16,092 16,097 16,089
======== ======== ======== ========
Earnings Per Share:
Income from continuing operations.......... $ .39 $ .35 $ 1.02 $ .82
Extraordinary gain ........................ - - - .28
-------- -------- -------- --------
Net income per share....................... $ .39 $ .35 $ 1.02 $ 1.10
======== ======== ======== ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 23,465
<SECURITIES> 0
<RECEIVABLES> 31,154
<ALLOWANCES> (1,784)
<INVENTORY> 15,479
<CURRENT-ASSETS> 76,458
<PP&E> 51,278
<DEPRECIATION> (25,322)
<TOTAL-ASSETS> 141,251
<CURRENT-LIABILITIES> 33,296
<BONDS> 0
0
0
<COMMON> 161
<OTHER-SE> 65,610
<TOTAL-LIABILITY-AND-EQUITY> 141,251
<SALES> 0
<TOTAL-REVENUES> 214,987
<CGS> 170,857
<TOTAL-COSTS> 188,883
<OTHER-EXPENSES> (214)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 26,318
<INCOME-TAX> 10,006
<INCOME-CONTINUING> 16,312
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,312
<EPS-PRIMARY> 1.02
<EPS-DILUTED> 1.02
</TABLE>
